1/28/2009 @ 6:30PM

Bringing Microsoft To VMware

Last summer, Paul Maritz was only hours into his new job as chief executive of
VMware
when he called Tod Nielsen, his former
Microsoft
colleague.

Nielsen, formerly Maritz’s right-hand man at Microsoft
and chief executive of
Borland Software
, talked with Maritz about Sarbanes-Oxley and other regulatory rules.

“Paul was essentially the No. 3 person at Microsoft, in charge of all system software,” Nielsen says. “I was responsible for all the interactions with the developer community, for marketing and launching and evangelizing.”

For the next three to four months, the two would get together regularly and talk about the challenges and opportunities Maritz faced as CEO of VMware
.

Around November, the duo decided to make it a permanent arrangement; in January, Nielsen joined Palo Alto, Calif.-based VMware as its first-ever chief operating officer. “It became clear that this was a great chance for us to work together and for me to join the company and help take things to the next level,” Nielsen says.

For Maritz, who replaced co-founder Diane Greene last July, taking the company to the next level meant bringing a new organizational model to the maturing VMware.

For Nielsen, it meant getting the company in shape: streamlining work flow while keeping accountability and responsibility in place. “Paul and I cannot make every decision,” Nielsen says. “We’ve got to make sure we’ve got empowered organizations that can drive and be focused on delivering their solutions.”

This means reorganizing VMware into business units that are responsible for meeting their own profit and revenue targets. In each unit, “we essentially have a businessperson we can work with, instead of having me needing to approve field marketing dollars for Europe or head count or whatever,” Nielsen says. “It allows Paul and I to manage the bigger picture and push a lot of the decisions out.”

Sound like something out of Microsoft’s playbook? It is. “This is a model I sort of grew up in at Microsoft,” Nielsen says. “It’s something I’m very familiar with because I was involved in helping build it.”

Nielsen, however, is quick to point out that VMware won’t become a Microsoft clone. “I’ve talked to folks that think we’re just cookie-cutting and just doing the same plays we did at Microsoft,” Nielsen says. “That’s certainly not the case, we’re just trying to find an organizational structure and strategic direction that is appropriate for VMware and one that Paul and I are comfortable leading.”

Still, a deep understanding of its main rival can only help VMware. “The way you compete against Microsoft successfully is you focus on your solution and customers,” Nielsen says. “If you end up looking back and you get obsessed with Microsoft, that’s the first sign you’re going to fail.”